OCTOBER 31, 2000
ANNUAL REPORT
INVESCO International Funds, Inc.
EUROPEAN FUND
INTERNATIONAL BLUE CHIP VALUE FUND
"THE PAST 12 MONTHS SAW TREMENDOUS SAVINGS IN INTERNATIONAL MARKETS,
REFLECTING SHIFTING ASSESSMENTS OF GLOBAL ECONOMIC RISKS AND CHANGING APPETITES
FOR HIGH VALUATION GROWTH STOCKS."
SEE PAGE 9
[INVESCO ICON] INVESCO FUNDS(R)
A Member of the AMVESCAP Group
<PAGE>
Discovering a world of opportunity in overseas markets
Fellow Shareholder:
The returns delivered by U.S. stock markets over the last several years have
overshadowed the performance of many investment markets across the globe. It's
reasonable to ask, with U.S. markets performing so well, why invest overseas?
That's precisely the reason you should consider other markets, of course.
Although the past can't predict the future, historically, no market has
outperformed for long periods of time. The U.S. and foreign markets haven't
always performed in lockstep with one another, and this added diversification is
one of the key reasons to consider international investing.
But there is also another important benefit of international investing: Many of
today's leading companies are based overseas and are available only on overseas
exchanges. Investors who focus entirely on U.S. firms may miss some of the most
compelling opportunities in industries such as telecommunications,
pharmaceuticals, and consumer services.
The tremendous success of the U.S. economy over the past decade can lead
investors to overlook the impressive products and technologies being developed
overseas. Anyone who has been to Europe recently, for example, can tell you that
Europeans' use of the cell phone dwarfs our own.
Our investment professionals can help you take advantage of the exciting growth
potential offered overseas. They are dedicated to finding dynamic companies that
we believe will deliver strong long-term performance. Inside this annual report,
you'll get a greater sense of how these international markets performed over the
last year, and how our managers are positioning their portfolios to take
advantage of opportunities in the future.
Our portfolio managers go the extra mile to understand each company they invest
in and the environment in which it operates. When it comes to international
investing, this kind of intensive research and analysis can make all the
difference.
Sincerely,
/s/ Mark H. Williamson
----------------------
Mark H. Williamson
Chairman and CEO, INVESCO Funds Group, Inc.
<PAGE>
"WHILE THE WEAKNESS IN THE EURO IS A NEAR-TERM CONCERN, WE BELIEVE THAT THE
COMMON CURRENCY WILL CONTINUE TO DRIVE POWERFUL CHANGES --- INCLUDING MARKET
INTEGRATION, CROSS-BORDER CONSOLIDATION AND DEREGULATION --- THAT WILL CREATE
TREMENDOUS LONG-TERM VALUE FOR INVESTORS." PAGE 4
TABLE OF CONTENTS
LETTER FROM THE CHAIRMAN...............................1
FUND REPORTS...........................................3
AN INTERVIEW WITH STEVEN CHAMBERLAIN...................7
MARKET HEADLINES.......................................9
INVESTMENT HOLDINGS...................................11
FINANCIAL STATEMENTS..................................19
NOTES TO FINANCIAL STATEMENTS.........................24
FINANCIAL HIGHLIGHTS..................................30
INVESCO INTERNATIONAL FUNDS, INC.
TOTAL RETURN
PERIODS ENDED 10/31/00*
<TABLE>
<CAPTION>
Manager's
Cumulative 10 years** or^ Report
Fund (Inception) 6 months 1 year 5 years** Since Inception Page #
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPEAN FUND-INVESTOR CLASS (6/86) (17.10%) 22.08% 20.15% 13.35% 3
--------------------------------------------------------------------------------------------------------
EUROPEAN FUND-CLASS C (2/00) (17.48%) N/A N/A (25.56%)^+ 3
--------------------------------------------------------------------------------------------------------
INTERNATIONAL BLUE CHIP
VALUE FUND-INVESTOR CLASS (10/98) (4.21%) 2.66% N/A 7.18%^ 5
--------------------------------------------------------------------------------------------------------
INTERNATIONAL BLUE CHIP
VALUE FUND-CLASS C (2/00) (4.30%) N/A N/A (7.63%)^+ 5
--------------------------------------------------------------------------------------------------------
</TABLE>
*PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. TOTAL RETURN ASSUMES
REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL VARY SO THAT, WHEN REDEEMED, AN INVESTOR'S SHARES MAY BE
WORTH MORE OR LESS THAN WHEN PURCHASED.
** AVERAGE ANNUALIZED
+ REPRESENTS THE PERIOD SHOWN, AND THEREFORE IS NOT ANNUALIZED.
^ FOR FUNDS INTRODUCED MORE RECENTLY.
<PAGE>
EUROPEAN FUND
YOUR FUND'S REPORT
FUND PERFORMANCE
Dear Shareholder:
We are pleased to report that the fund earned an impressive return over the past
12 months, easily outdistancing the broad European market indexes. We attribute
these results to our focus on leading growth companies, which rewarded us with
sizable returns that more than compensated for the weakness of the euro
currency.
Our growth-oriented approach was especially beneficial during the first half of
the period, when New Economy shares in dynamic industries such as technology,
telecommunications, and media well-outpaced stocks in more traditional areas of
the global economy. While the more recent market period has been less hospitable
to high-valuation growth shares, our companies continued to prove their quality
-- withstanding broad market pressures to advance further. If anything, this
period has made investors more discriminating in their choice of opportunities,
and has increasingly rewarded the kind of top-tier, fundamental growth companies
we own.
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EUROPEAN FUND -
TOP 10 COMMON STOCK HOLDINGS
% of Total Net Assets as of 10/31/00
--------------------------------------------------------------------------------
Vodafone Group PLC.........................................................3.47%
Tomra Systems ASA..........................................................3.37%
Telefonaktiebolaget LM Ericsson AB Series B Shrs...........................2.99%
Nokia Oyj..................................................................2.81%
Alcatel SA.................................................................2.57%
Autonomy Corp PLC..........................................................2.50%
Assa Abloy AB Series B Shrs................................................2.06%
Altran Technologies SA.....................................................2.05%
Kudelski SA Bearer Shrs....................................................1.91%
Vestas Wind Systems A/S....................................................1.81%
HOLDINGS AND COMPOSITION OF HOLDINGS ARE SUBJECT TO CHANGE.
--------------------------------------------------------------------------------
For the 12-month period ended October 31, 2000, the value of European
Fund-Investor Class shares rose 22.08%. This performance easily outpaced that of
the MSCI-Europe Index, which gained only 1.21% over the same period. (Of course,
past performance is no guarantee of future results). (1),(2)
TELECOMMUNICATIONS EQUIPMENT PROVIDERS REWARD INVESTORS
Over the past year, we continued to focus on leading companies in industries and
market niches that we believed would grow faster than the overall economy. One
such area is telecommunications equipment. While our concerns over heightened
competition and eroding margins led us to trim our exposure to
telecommunications service providers, we continue to foresee compelling growth
opportunities for companies supporting the build-out of wireless and high-speed
fiber optic networks.
<PAGE>
Companies such as Finland's Nokia Corp, Sweden's LM Ericsson and France's
Alcatel SA are poised to benefit no matter which service providers emerge
dominant. Nokia and Ericsson, in particular, have been tremendous performers for
us over the past year, although both stocks have been besieged recently by
concerns that the momentum in the wireless business, while still strong, may not
measure up to the market's fevered expectations. In particular, Nokia's shares
lost ground this summer after the company issued a profits warning. While we
were concerned about this news, we remained confident in Nokia's management team
and business prospects, and thus used the sell-off as a buying opportunity. We
were rewarded for our confidence when the stock subsequently rebounded after the
company reported exceptionally strong third quarter results that indicated
continued growth in the wireless handset market.
FINDING WINNERS IN NONTRADITIONAL PLACES
While New Economy shares serve as the cornerstone of the portfolio, we have also
found compelling growth stories in other areas of the European market. One less
traditional play is Turbo Genset PLC, a manufacturer of flexible micro turbines
used in localized power generation. The company is capitalizing on growing
demand for reliable, decentralized energy generation needed to power data
centers -- the central nervous system of the New Economy. Other standouts
include Assa Abloy AB, the world's largest supplier of high quality locks, and
Vestas Wind Systems A/S, the global leader in wind turbines.
Looking ahead, we remain optimistic on economic prospects for Europe. Economic
growth appears to be moderating, inflation outside the energy sector remains
benign, and interest rate fears have eased. While the weakness in the euro is a
near-term concern, we believe that the common currency will continue to drive
powerful changes -- including market integration, cross-border consolidation,
and deregulation -- that will create tremendous long-term value for investors.
To capitalize on these changes, we continue to focus on leading companies in the
most powerful growth areas that can perform well in any kind of economic
environment.
PIE CHART: EUROPEAN FUND
COUNTRY BREAKDOWN
AS OF 10/31/00
[PIE CHART]
% OF TOTAL NET ASSETS
United Kingdom..................25.62%
France..........................15.44%
Switzerland.....................10.57%
Germany.........................10.10%
Sweden...........................9.48%
Netherlands......................5.44%
Spain............................3.72%
Finland..........................3.48%
Norway...........................3.37%
Denmark.......... ...............1.81%
Other Countries..................5.31%
Net Cash & Cash Equivalents......5.66%
<PAGE>
LINE GRAPH: INVESCO EUROPEAN FUND - INVESTOR CLASS
GROWTH OF $10,000(1)
This line graph compares the value of a $10,000 investment in INVESCO European
Fund - Investor Class to the value of a $10,000 investment in the MSCI-Europe
Index(2), assuming in each case reinvestment of all dividends and capital gain
distributions, for the ten year period ended 10/31/00.
INVESCO European Fund - MSCI-Europe Index(2)
Investor Class
10/90 $10,000 $10,000
10/91 $10,434 $10,747
10/92 $9,680 $10,597
10/93 $11,789 $13,372
10/94 $12,666 $14,930
10/95 $13,986 $16,972
10/96 $17,268 $20,018
10/97 $20,390 $25,303
10/98 $25,470 $31,229
10/99 $28,689 $35,242
10/00 $35,024 $35,669
LINE GRAPH: INVESCO EUROPEAN FUND -CLASS C
GROWTH OF $10,000(1)
This line graph compares the value of a $10,000 investment in INVESCO European
Fund -Class C to the value of a $10,000 investment in the MSCI-Europe Index(2),
assuming in each case reinvestment of all dividends and capital gain
distributions, for the eight month period ended 10/31/00.
INVESCO European Fund - MSCI-Europe Index(2)
Class C
02/00 $10,000 $10,000
10/00 $7,444 $9,140
(1) PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL VARY SO THAT, WHEN REDEEMED, AN INVESTOR'S
SHARES MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED. THE LINE GRAPHS ILLUSTRATE
THE VALUE OF A $10,000 INVESTMENT, PLUS REINVESTED DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS.
(2) THE MSCI-EUROPE INDEX IS AN UNMANAGED INDEX CONSIDERED REPRESENTATIVE
OF EUROPEAN STOCK MARKETS. THE INDEX IS NOT MANAGED; THEREFORE, ITS PERFORMANCE
DOES NOT REFLECT MANAGEMENT FEES AND OTHER EXPENSES ASSOCIATED WITH THE FUND.
<PAGE>
FUND MANAGEMENT
STEVEN A. CHAMBERLAIN
EUROPEAN FUND
STEVEN CHAMBERLAIN IS THE LEAD MANAGER FOR THE TEAM WHICH OVERSEES INVESCO
EUROPEAN FUND. HE HOLDS A BSC DEGREE IN GEOLOGY FROM KINGSTON POLYTECHNIC AND
HAS EXPERIENCE IN EQUITIES AND CURRENCY TRADING. HE JOINED INVESCO IN 1987.
FOR MORE DETAILS ON STEVEN'S CURRENT OUTLOOK FOR EUROPEAN MARKETS, PLEASE SEE
PAGE 7.
INTERNATIONAL BLUE CHIP VALUE FUND
YOUR FUND'S REPORT
FUND PERFORMANCE
Dear Shareholder:
We are pleased to report that our performance over the past 12 months benefited
from a broadening of international equity markets away from the narrow group of
technology and telecommunications stocks that dominated gains in 1999. By spring
of 2000, investors were again looking for compelling opportunities in more
traditional and attractively priced sectors.
Consumer goods, energy and financial services were clear beneficiaries -- all
areas that were well represented in the fund. Our emphasis on leading companies
in these more value-oriented industries also served us well during the recent
period of volatility in high valuation stocks.
For the 12-month period ended October 31, 2000, International Blue Chip Value
Fund-Investor Class shares delivered a gain of 2.66%, which compares favorably
to a 2.66% decline in the MSCI-EAFE Index. (Of course, past performance is not a
guarantee of results.)(3),(4)
--------------------------------------------------------------------------------
INTERNATIONAL BLUE CHIP VALUE FUND -
TOP 10 COMMON STOCK HOLDINGS
% of Total Net Assets as of 10/31/00
--------------------------------------------------------------------------------
Unilever NV New York Registered Shrs.......................................3.24%
HSBC Holdings PLC..........................................................2.95%
Nestle SA Registered Shrs..................................................2.80%
Shell Transport & Trading PLC New York Registered Shrs.....................2.74%
Koninklijke Philips Electronics NV New York Registered Shrs................2.71%
Novartis AG Registered Shrs................................................2.54%
Fuji Photo Film Ltd........................................................2.24%
ING Groep NV...............................................................2.18%
Deutsche Bank AG Registered Shrs...........................................2.15%
Total Fina Elf SA Sponsored ADR Representing
1/2 Series B Shr.........................................................2.00%
HOLDINGS AND COMPOSITION OF HOLDINGS ARE SUBJECT TO CHANGE.
--------------------------------------------------------------------------------
<PAGE>
RECENT ROTATION TO VALUE STOCKS PAYS OFF
While our results in the first half of the period were hindered by our value
focus, we were heartened to see our approach rewarded in the following six
months, as investors started to revisit many of the high-quality, attractively
priced stocks we own. Among our top performers were consumer goods stocks,
including Switzerland's Nestle SA.
The fund's performance was also aided by our strong weighting in the financial
services and energy sectors. In the financial services area, we focused on
companies that benefit from healthy fee and interest income that helps insulate
their businesses from downward pressures in equity markets. One standout was
HSBC Holdings PLC -- a United Kingdom-based diversified financial services
company serving high net worth individuals. Meanwhile, continued tight oil
inventories and high energy prices helped our major oil-related holdings,
including Total Fina Elf SA and Shell Transport & Trading PLC.
TRIMMING HIGH-VALUED STOCKS REWARDED
While our diversified strategy led us to invest in a number of more
growth-oriented industries --including telecommunications -- we emphasized the
more reasonably valued stocks within these sectors. Early in the period, we
benefited from strong gains in telecom equipment makers such as Nokia Corp and
LM Ericsson, but opted to sell out of these positions when their valuations
became distended. This decision worked in our favor, helping us avoid subsequent
corrections in these stocks.
We reallocated assets to another leading telecom equipment powerhouse, France's
Alcatel SA, which proved to be one of our top-performing positions during the
period. Alcatel SA continues to capitalize on its emerging reputation as a
wireline digital leader, a reputation cemented by the completion of its
acquisition of Newbridge Networks.
ASIA & LATIN AMERICA CONTINUE TO STRUGGLE
Outside of Europe, we have been disappointed by the recent lackluster
performance of Asian and Latin American shares. The Japanese equity market, in
particular, has been overshadowed by a rash of high-profile bankruptcies,
especially in the financial services area, while the rest of Asia was hindered
by lingering political and economic uncertainty.
Latin American stocks performed relatively well early in the period, but have
been pressured more recently by the threat of a global economic slowdown. These
markets appear to be pricing in a far more dismal economic outlook than global
fundamentals, or equity market behavior in the United States or Europe, would
suggest. We feel this pressure has been overstated, however, and we believe our
Latin American holdings continue to offer compelling investment opportunities at
attractive valuations.
In our opinion, the outlook for international investments remains favorable to
our emphasis on large and well-established companies from a highly diversified
selection of industries and regions. While valuations have retracted somewhat,
we still believe there are areas susceptible to correction. For that reason, we
continue to focus on identifying pockets of the global economy -- as well as
individual stocks -- that offer solid long-term potential and limited valuation
risk. At the same time, we continue to emphasize high-quality, stable, and
growing businesses -- a strategy we believe will benefit our investors,
especially if global equity markets remain volatile.
<PAGE>
PIE CHART: INTERNATIONAL BLUE CHIP VALUE FUND
COUNTRY BREAKDOWN
AS OF 10/31/00
[PIE CHART]
% OF TOTAL NET ASSETS
Japan..............................21.73%
United Kingdom.....................19.14%
Netherlands........................10.00%
France..............................7.79%
Switzerland.........................7.27%
Germany.............................6.33%
Spain...............................4.43%
Hong Kong...........................3.94%
Australia...........................3.49%
Italy...............................2.93%
Other Countries.....................9.62%
Net Cash & Cash Equivalents.........3.33%
LINE GRAPH: INVESCO INTERNATIONAL BLUE CHIP VALUE FUND - INVESTOR CLASS
GROWTH OF $10,000(3)
This line graph compares the value of a $10,000 investment in INVESCO
International Blue Chip Value Fund - Investor Class to the value of a $10,000
investment in the MSCI-EAFE Index(4), assuming in each case reinvestment of all
dividends and capital gain distributions, for the period from inception (10/98)
through 10/31/00.
INVESCO International Blue Chip Value Fund - MSCI-EAFE Index(4)
Investor Class
10/98 $10,000 $10,000
10/99 $11,199 $12,337
10/00 $11,497 $12,009
LINE GRAPH: INVESCO INTERNATIONAL BLUE CHIP VALUE FUND -CLASS C
GROWTH OF $10,000(3)
This line graph compares the value of a $10,000 investment in INVESCO
International Blue Chip Value Fund -Class C to the value of a $10,000 investment
in the MSCI-EAFE Index(4), assuming in each case reinvestment of all dividends
and capital gain distributions, for the eight month period ended 10/31/00.
INVESCO International Blue Chip Value Fund - MSCI-EAFE Index(4)
Class C
02/00 $10,000 $10,000
10/00 $9,237 $8,969
<PAGE>
(3) PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL VARY SO THAT, WHEN REDEEMED, AN INVESTOR'S
SHARES MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED. THE LINE GRAPHS ILLUSTRATE
THE VALUE OF A $10,000 INVESTMENT, PLUS REINVESTED DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS.
(4) THE MSCI-EAFE INDEX IS AN UNMANAGED INDEX CONSIDERED REPRESENTATIVE OF
EUROPEAN/AUSTRALIAN/FAR EASTERN STOCK MARKETS. THE INDEX IS NOT MANAGED;
THEREFORE, ITS PERFORMANCE DOES NOT REFLECT MANAGEMENT FEES AND OTHER EXPENSES
ASSOCIATED WITH THE FUND.
FUND MANAGEMENT
JOHN D. ROGERS, CFA
INTERNATIONAL BLUE CHIP VALUE FUND
JOHN ROGERS LEADS THE PORTFOLIO MANAGEMENT TEAM FOR INVESCO INTERNATIONAL BLUE
CHIP VALUE FUND. JOHN SERVES AS THE CHIEF EXECUTIVE OFFICER AND CHIEF INVESTMENT
OFFICER FOR INVESCO'S GLOBAL INVESTMENT MANAGEMENT COMPANY IN THE UNITED STATES.
HE HAS A BA IN HISTORY FROM YALE UNIVERSITY AND AN MA IN EAST ASIAN STUDIES FROM
STANFORD UNIVERSITY.
<PAGE>
Questions and Answers
AN INTERVIEW WITH EUROPEAN MANAGER STEVEN CHAMBERLAIN
STEVEN CHAMBERLAIN MANAGES INVESCO EUROPEAN FUND
Leaving no stone unturned in the pursuit of growth
STEVEN, WHAT IS YOUR CURRENT OUTLOOK FOR THE EUROPEAN ECONOMIC ENVIRONMENT?
STEVEN: The European investment climate looks favorable. Economic growth in the
euro zone continues at a healthy clip, supported by vigorous business and strong
consumer confidence. Europe is expected to deliver economic growth of around 3%
in 2001, less robust than we saw in the first half of this year but still a
strong rate. At the same time, inflation remains fairly low despite the recent
pressures from oil prices and the falling euro. And we believe the euro could
stabilize next year, with a narrowing of growth and interest rate differentials
favoring U.S. dollar-denominated investments. Overall, this combination of
healthy economic growth and benign inflation should provide a stable platform
for further market gains.
WHERE ARE YOU FINDING INVESTMENT OPPORTUNITIES IN THE CURRENT ENVIRONMENT?
STEVEN: Our focus, as always, is on high-quality growth companies either
operating in growth markets or those that are taking market share away from
competitors. We continue to find these companies in many different industries
across Europe, including New Economy areas, such as technology, as well as
economic sectors not traditionally associated with growth investing, such as
industrial products.
THE PAST SIX MONTHS HAVE BEEN CHALLENGING FOR TECHNOLOGY STOCKS. HAS THE RECENT
VOLATILITY AFFECTED YOUR LONG-TERM VIEW ON TECHNOLOGY INVESTING?
STEVEN: Not at all. Technology continues to transform our lives and the way we
do business, and we remain very optimistic about the long-term opportunities
created by these changes. That said, we recognize that technology companies are
not immune to short-term economic cycles -- a fact demonstrated by the recent
slowdown in a number of technology niches. If anything, however, we think these
periods of market consolidation can create exciting opportunities for
top-quality companies. For this reason, our goal is to identify long-term
winners -- firms that dominate their industries and use periods of slower growth
to build on their leadership. These include large, well-known companies such as
Nokia Corp, as well as smaller companies that dominate powerful niches. One
example of the latter is Germany's Aixtron, which makes specialized equipment
used to manufacture compound semiconductors. Aixtron continues to extend its
leadership in a market that is growing 50% a year, and we anticipate even
greater opportunities as compound semiconductors replace more traditional
silicon chips.
WHAT ABOUT GROWTH OPPORTUNITIES OUTSIDE THE TECHNOLOGY SECTOR?
STEVEN: The health care sector is another dynamic growth area. While many of the
dominant pharmaceutical companies are now quite expensive, we've been able to
find some compelling growth opportunities in dominant medical equipment
companies, which are well represented in Europe. One standout is Switzerland's
Synthes-Stratec, a leading provider of implants and devices that treat
orthopedic injuries. The company continues to develop new products and
technology, and we remain upbeat on its prospects.
<PAGE>
CAN YOU GIVE US SOME EXAMPLES OF PROMISING GROWTH OPPORTUNITIES IN LESS
TRADITIONAL GROWTH INDUSTRIES?
STEVEN: I mentioned industrial products -- INVESCO European Fund is currently
overweight in the industrial products area. But this doesn't mean we're
investing in smokestack industries such as steel or chemicals. Instead, we've
identified leading companies in fast-growing market niches. Vestas Wind Systems
A/S, for example, is expanding rapidly through the sale of wind turbines. The
wind power market is growing at 30% a year as governments and industry groups
seek out renewable and environmentally friendly energy sources.
Another trend we're following is the expanded outsourcing of business
operations, which includes everything from inventory management to the delivery
of components. On average, U.S. companies outsource 65% of their logistics costs
to outside firms, which have the core competencies and economies of scale to
handle these processes more efficiently. While European companies outsource less
than 25% of these costs, that share is expected to rise as management recognizes
the potential cost savings. To take advantage of this trend, we've invested in
companies such as Thiel Logistik AG of Luxembourg and Altran Technologies SA of
France. Altran, in particular, is the European leader in managing research and
development projects for other companies. It's growing at more than 40% per
year, and we are excited about its long-term prospects.
IS THERE A COMMON THREAD CONNECTING ALL OF THESE COMPANIES?
STEVEN: We've invested in all of them because we believe they can deliver
above-average earnings growth over a sustained period of time, three years or
longer. They are precisely the kind of companies we believe can provide superior
long-term returns for our shareholders.
"OUR FOCUS, AS ALWAYS, IS ON HIGH-QUALITY GROWTH COMPANIES EITHER OPERATING
IN GROWTH MARKETS OR THOSE THAT ARE TAKING MARKET SHARE AWAY FROM COMPETITORS."
- STEVEN CHAMBERLAIN
SINCE THE FUNDS ARE ACTIVELY MANAGED, HOLDINGS WILL CHANGE OVER TIME.
<PAGE>
MARKET HEADLINES:
"EUROPE, IN PARTICULAR, CONTINUES TO EXPERIENCE ITS STRONGEST EXPANSION IN A
DECADE, SUPPORTED BY TECHNOLOGICAL INNOVATION, DEREGULATION, AND CROSS-BORDER
CONSOLIDATION."
MARKET OVERVIEW:
NOVEMBER 1999 TO NOVEMBER 2000
The past 12 months saw tremendous swings in international markets, reflecting
shifting assessments of global economic risks and changing appetites for
high-valuation growth stocks. For the first half of the period, market gains
were led by New Economy shares in booming economic sectors such as technology
and telecommunications. But with the global economy firing on all cylinders, the
threat of higher interest rates soon led investors to question the lofty
valuations on many of these stocks. By March, investors were rotating out of
growth shares, triggering a sharp correction in the U.S. Nasdaq Composite Index
and other New Economy stocks overseas.
This sell-off appeared overdone in many cases, and shares rebounded as investors
again recognized their solid fundamentals and appealing growth potential. Yet
markets remained extremely volatile through the summer and fall. Investors
weighed the risk high valuations on some New Economy stocks against the threat
of a global economic slowdown and corresponding pressure on corporate earnings.
While most of the negative company-specific news came out of the United States,
these reports cast a heavy cloud over markets worldwide. Adding to the
uncertainty was a surge in oil prices, the ongoing slide in the euro currency,
and a spate of profit and revenue warnings from a number of high-profile
technology companies.
<PAGE>
These pressures fell especially hard on cyclically sensitive businesses such as
retailing and capital goods manufacturing. Yet New Economy companies were not
immune, and struggled amid concerns that growth in these technology-related
sectors -- while still strong -- may not keep pace with investors' earlier
expectations.
EUROPEAN GROWTH REMAINS STRONG DESPITE EURO WEAKNESS
Despite these pressures, the international economic climate looks generally
positive. Europe, in particular, continues to experience its strongest expansion
in a decade, supported by technological innovation, deregulation, and
cross-border consolidation. Inflation remains relatively benign outside the
energy sector, and interest rate pressures appear to have eased.
Most worrisome for Europe has been the chronic weakness of the fledgling euro
currency. While global central banks have taken steps to intervene on behalf of
the currency, the euro's weakness is unlikely to gain much support as long as
relative interest rates and financial market performance continue to favor the
United States and U.S. dollar-denominated investments.
EMERGING MARKETS BUFFETED BY VOLATILITY
While Asian economic recoveries remained on track, global investors'
appetite for the region's investments has been soured by lingering political
uncertainty and entrenched structural imbalances. In particular, a rash of high
corporate bankruptcies in both Japan and South Korea were hard for markets to
digest. The exception was China, which remained one of the world's
top-performing markets for the period, supported by its ongoing economic
recovery.
Latin American markets performed somewhat better, supported by their correlation
with U.S. equities. By summer, however, fears of a global economic slowdown
reduced investors' appetites for riskier investments, triggering a sell-off in
Latin American shares. Indeed, some hard-hit stocks in Asia and Latin America
appeared to be pricing in a global recession -- despite the fact that global
economic growth remains generally healthy, albeit less robust than it was a year
ago.
STOCK-PICKER'S MARKET
Looking ahead, we recognize that markets could remain volatile as investors
assess the earnings climate. If anything, however, we believe this environment
will make investors more discriminating in their choice of investments and will
reward stock pickers, such as ourselves, who can identify companies able to
perform in any kind of economy.
<PAGE>
INVESTMENT HOLDINGS
STATEMENT OF INVESTMENT SECURITIES
INVESCO International Funds, Inc.
October 31, 2000
SHARES,
UNITS OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
--------------------------------------------------------------------------------
European Fund
92.60 COMMON STOCKS
1.85 DENMARK
Vestas Wind Systems A/S MS 300,000 $ 16,228,035
================================================================================
3.56 FINLAND
Elisa Communicion Oyj A Shrs TL 216,204 5,992,423
Nokia Oyj CM 613,600 25,219,036
================================================================================
31,211,459
15.80 FRANCE
A Novo SC 27,000 3,961,428
Alcatel SA CM 379,000 23,097,185
Altran Technologies SA EC 90,100 18,397,234
AXA IU 108,333 14,324,396
Banque Nationale de Paris
Paribas SA BM 120,000 10,333,939
Canal Plus BR 45,000 6,503,211
Carrefour SA RF 80,000 5,363,613
Dassault Systemes SA CO 112,100 8,537,184
France Telecom SA TL 40,000 4,176,973
Havas Advertising SA SS 250,000 4,023,981
Lagardere SCA SS 140,000 7,938,622
NRJ Group(a) BR 100,000 3,305,640
Sidel SA MD 70,000 3,675,617
Studio Canal(a) PI 125,358 1,106,098
Thomson CSF AE 250,000 11,209,510
Total Fina Elf SA Series B Shrs OI 88,074 12,586,247
================================================================================
138,540,878
6.38 GERMANY
Aixtron AG ES 91,000 12,479,893
Consors Discount Broker AG(a) IV 90,000 7,246,980
Direkt Anlage Bank AG(a) IV 100,000 4,475,328
EM.TV & Merchandising AG BR 280,320 8,313,597
Intershop Communications AG(a) CN 83,600 3,684,687
Kamps AG FD 109,870 1,746,109
Siemens AG MS 60,000 7,630,943
Wedeco AG Water Technology(a) UW 280,000 10,406,833
================================================================================
55,984,370
0.90 IRELAND
SmartForce PLC Sponsored ADR
Representing Ord Shrs(a) CO 156,500 7,876,352
================================================================================
0.55 ISRAEL
Card-Guard Scientific Survival
Ltd(a) ME 79,700 4,798,134
================================================================================
1.31 ITALY
Banca Fideuram SpA FN 750,000 11,518,884
================================================================================
0.73 LUXEMBOURG
Thiel Logistik AG(a) CO 40,560 6,393,742
================================================================================
<PAGE>
SHARES,
UNITS OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
--------------------------------------------------------------------------------
5.57 NETHERLANDS
ASM Lithography Holding NV(a) CY 400,000 $ 10,920,478
ING Groep NV IU 200,000 13,717,558
Koninklijke Philips Electronics NV EO 326,640 12,821,390
QIAGEN NV(a) BH 113,200 4,845,390
Teleplan International NV(a) CO 180,000 6,560,424
================================================================================
48,865,240
3.45 NORWAY
Tomra Systems ASA PC 753,996 30,239,289
================================================================================
0.20 PORTUGAL
M Accoes Portugal Closed-End
Fund(a)(b) IC 90,000 1,742,830
================================================================================
3.80 SPAIN
Banco Santander Central Hispano SA BM 1,560,000 15,100,164
Telefonica Publicidad e Infomacion
SA SA 720,000 4,882,176
Telefonica SA(a) TN 371,000 7,065,907
TelePizza SA(a) RS 1,650,400 6,308,944
================================================================================
33,357,191
9.71 SWEDEN
Assa Abloy AB Series B Shrs MV 1,005,301 18,460,617
Framtidsfabriken AB(a) CO 248,000 650,938
LGP Telecom Holding AB MT 200,000 4,990,020
OM Gruppen AB FN 250,000 8,907,186
Securitas AB Series B Shrs SS 402,500 8,556,138
Skandia Forsakrings AB IU 600,000 10,149,701
Telefonaktiebolaget LM Ericsson AB
Series B Shrs CM 2,020,000 26,812,375
Telelogic AB(a) CO 1,000,000 6,586,826
================================================================================
85,113,801
10.82 SWITZERLAND
Actelion Ltd(a) HD 6,825 3,017,560
Adecco SA Registered Shrs SC 7,257 5,016,657
Charles Voegele Holding AG FT 75,000 14,098,215
Kudelski SA Bearer Shrs(a) EI 12,720 17,119,404
Leica Geosystems AG(a) EI 44,000 12,479,840
Straumann Holding AG Registered Shrs ME 5,000 10,803,070
Swisslog Holding AG Registered Shrs MS 17,200 9,469,996
Synthes-Stratec Inc ME 20,000 12,735,665
Unaxis Holding AG Registered Shrs(a) ES 22,000 5,291,697
Zurich Financial Services AG IU 10,000 4,838,441
================================================================================
94,870,545
26.22 UNITED KINGDOM
Advanced Medical Solutions Group
PLC(a) HD 309,091 73,608
ARM Holdings PLC(a) ES 1,000,000 9,874,280
Arsenal Football Club PLC(a) ET 2 8,132
Autonomy Corp PLC(a) CO 439,035 22,440,800
Baltimore Technologies PLC(a) CO 250,000 1,925,848
Bookham Technology PLC(a) ES 95,000 3,130,074
BP Amoco PLC OI 1,600,000 13,580,039
British Sky Broadcasting PLC(a) CA 300,000 4,334,519
Celltech Group PLC(a) BH 31,500 626,654
<PAGE>
SHARES,
UNITS OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
--------------------------------------------------------------------------------
CGNU PLC IU 600,000 $ 8,033,017
COLT Telecom Group PLC(a) TN 245,000 7,826,819
Dialog Semiconductor PLC(a) ES 152,289 3,485,164
Glaxo Wellcome PLC HD 300,000 8,642,899
Granada Media PLC(a) LT 502,855 2,928,085
HSBC Holdings PLC BM 700,000 9,981,736
InTechnology PLC(a) CO 1,105,000 5,086,489
Manchester United PLC ET 3,000,000 9,670,986
Misys PLC CO 610,710 6,367,310
Morse Holdings PLC CO 200,000 1,684,436
NDS Group PLC Sponsored ADR
Representing Ord Shrs(a) SS 74,000 5,550,000
Pace Micro Technology PLC EI 300,000 2,143,300
Prudential PLC IU 350,000 4,711,339
Psion PLC CY 585,380 3,544,626
Sage Group PLC CO 600,000 4,382,438
SmithKline Beecham PLC HD 650,000 8,400,399
Spirent PLC EI 1,160,000 10,763,546
TeleCity PLC(a) CO 1,098,281 12,423,600
Turbo Genset PLC(a) EO 400,000 13,010,816
Vodafone Group PLC TC 7,486,106 31,171,373
WPP Group PLC SA 1,050,000 14,103,521
================================================================================
229,905,853
1.75 UNITED STATES
Maxim Pharmaceuticals(a) BH 225,000 9,984,375
OpenTV Corp Class A Shrs(a) CO 200,000 5,375,000
================================================================================
15,359,375
TOTAL COMMON STOCKS (Cost $675,246,844) 812,005,978
================================================================================
3.96 PREFERRED STOCKS
3.96 GERMANY
Marschollek, Lautenschlaeger
und Partner AG Pfd IL 110,000 14,871,142
Porsche AG Pfd AM 3,500 11,777,402
SAP AG Pfd CO 40,000 8,052,539
================================================================================
TOTAL PREFERRED STOCKS (Cost $17,548,511) 34,701,083
================================================================================
3.44 SHORT-TERM INVESTMENTS
3.44 UNITED STATES
0.57 Commercial Paper
American Express Credit, 6.580%,
11/3/2000 (Cost $5,000,000) CF $5,000,000 5,000,000
================================================================================
1.15 Investment Companies
INVESCO Treasurer's Series Money
Market Reserve Fund, 6.420%
(Cost $10,065,912) IC 10,065,912 10,065,912
================================================================================
<PAGE>
SHARES,
UNITS OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
--------------------------------------------------------------------------------
1.72 Repurchase Agreements
Repurchase Agreement with
State Street dated 10/31/2000
due 11/1/2000 at 6.450%,
repurchased at $15,082,702
(Collateralized by US Treasury
Notes, due 10/31/2002 at 5.750%,
value $15,391,500)
(Cost $15,080,000) RA $15,080,000 $ 15,080,000
================================================================================
TOTAL SHORT-TERM INVESTMENTS (Cost $30,145,912) 30,145,912
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $722,941,267)
(Cost for Income Tax Purposes $729,729,033) $ 876,852,973
================================================================================
INTERNATIONAL BLUE CHIP VALUE FUND
94.28 COMMON STOCKS
3.51 AUSTRALIA
National Australia Bank Ltd BE 90,000 $ 1,249,898
News Corp Ltd ET 30,000 313,718
Rio Tinto Ltd GP 45,594 625,685
================================================================================
2,189,301
1.29 CANADA
Barrick Gold GP 60,000 802,500
================================================================================
7.84 FRANCE
Alcatel SA Sponsored ADR
Representing Ord Shrs CM 12,000 748,500
AXA IU 2,753 364,017
AXA Sponsored ADR Representing
1/2 Shr IU 4,000 265,750
Compagnie Generale des
Etablissements Michelin Series
B Shrs AP 18,000 520,257
Societe Generale Series A Shrs BM 18,000 1,020,680
Total Fina Elf SA Sponsored ADR
Representing 1/2 Series B Shr OI 17,537 1,256,088
Vivendi SA SF 10,000 717,917
================================================================================
4,893,209
4.90 GERMANY
BASF AG CD 29,000 1,135,614
Deutsche Bank AG Registered Shrs BM 16,500 1,349,311
Siemens AG MS 4,500 572,321
================================================================================
3,057,246
3.96 HONG KONG
Cheung Kong Holdings Ltd RE 75,000 829,423
China Mobile Ltd(a) TC 140,000 902,027
MTR Corp Ltd(a) RR 500,000 740,470
================================================================================
2,471,920
2.95 ITALY
San Paolo-IMI SpA Sponsored ADR
Representing 2 Ord Shrs BM 28,000 903,000
Telecom Italia SpA Sponsored ADR
Representing 10 Ord Shrs TN 8,000 940,000
================================================================================
1,843,000
<PAGE>
SHARES,
UNITS OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
--------------------------------------------------------------------------------
21.86 JAPAN
Bank of Tokyo-Mitsubishi Ltd BE 80,850 $ 969,252
Canon Inc OE 20,000 793,113
Canon Inc Sponsored ADR
Representing Ord Shrs OE 15,000 608,437
Fuji Photo Film Ltd PI 38,000 1,409,470
Hitachi Ltd Sponsored ADR
Representing 10 Cmn Shrs EE 7,000
780,500
Ito-Yokado Ltd RF 23,000 1,038,465
Kyocera Corp EI 8,400 1,092,408
Mitsubishi Heavy Industries Ltd MD 200,000 776,628
Nintendo Co Ltd TY 6,000 991,849
Nippon Telegraph & Telephone
Sponsored ADR Representing
1/200 Ord Shr TN 25,000 1,142,187
Shin-Etsu Chemical Ltd CD 25,000 1,025,735
Sony Corp Sponsored ADR
Representing Ord Shrs EO 13,400 1,112,200
Takefuji Corp CF 10,000 989,102
Toyota Motor AM 23,000 918,399
================================================================================
13,647,745
2.32 MEXICO
Grupo Modelo SA de CV Series C Shrs BA 200,000 532,888
Telefonos de Mexico SA Sponsored ADR
Representing 20 Series L Shrs TN 17,000 916,938
================================================================================
1,449,826
10.06 NETHERLANDS
ABN AMRO Holding NV Sponsored ADR
Representing Ord Shrs BM 50,000 1,171,875
ING Groep NV IU 20,000 1,371,756
Koninklijke Philips Electronics
NV New York Registered Shrs
Representing Ord Shrs EO 42,680 1,704,532
Unilever NV New York Registered Shrs CG 39,999 2,032,449
================================================================================
6,280,612
1.38 PORTUGAL
BPI-SGPS SA Registered Shrs IV 9,600 31,165
Portugal Telecom SA Sponsored ADR
Representing Ord Shrs TN 95,000 831,250
================================================================================
862,415
1.77 SOUTH KOREA
Korea Telecom Sponsored ADR
Representing 1/2 Ord Shr TN 30,000 1,106,250
================================================================================
4.45 SPAIN
Banco Popular Espanol SA BE 22,000 657,314
Repsol-YPF SA Sponsored ADR
Representing Ord Shrs OI 75,000 1,195,312
Telefonica SA Sponsored ADR
Representing 3 Ord Shrs(a) TN 16,000 927,000
================================================================================
2,779,626
7.31 SWITZERLAND
Nestle SA Registered Shrs FD 850 1,760,886
Novartis AG Registered Shrs HD 1,050 1,592,431
<PAGE>
SHARES,
UNITS OR
INDUSTRY PRINCIPAL
% DESCRIPTION CODE AMOUNT VALUE
--------------------------------------------------------------------------------
Zurich Financial Services AG IU 2,500 $ 1,209,610
================================================================================
4,562,927
1.43 TAIWAN
Taiwan Semiconductor Manufacturing
Ltd Sponsored ADR Representing 5
Ord Shrs(a) ES 39,320 892,073
================================================================================
19.25 UNITED KINGDOM
Abbey National PLC FN 50,000 690,474
British Telecommunications PLC TN 24,980 293,090
British Telecommunications PLC
Sponsored ADR Representing 10
Ord Shrs TN 4,500 535,500
Corus Group PLC Sponsored ADR
Representing 10 Ord Shrs IS 40,000 360,000
Diageo PLC BA 125,000 1,180,739
Glaxo Wellcome PLC HD 20,000 576,193
Glaxo Wellcome PLC Sponsored ADR
Representing 2 Ord Shrs HD 10,000 581,875
HSBC Holdings PLC BM 130,000 1,853,751
Marks & Spencer PLC RD 175,000 487,906
Peninsular & Oriental Steam
Navigation Deferred Shrs AF 130,000 536,115
Royal Bank of Scotland Group PLC BM 49,040 1,101,634
Royal Bank of Scotland Group PLC
Value Shrs(a) BM 49,040 58,037
Shell Transport & Trading PLC New
York Registered Shrs Sponsored
ADR Representing 6 Ord Shrs OI 35,000 1,721,562
SmithKline Beecham PLC HD 44,900 580,274
SmithKline Beecham PLC Sponsored ADR
Representing 5 Ord Shrs HD 8,000 521,500
Vodafone Group PLC TC 225,000 936,877
================================================================================
12,015,527
TOTAL COMMON STOCKS (Cost $57,745,483) 58,854,177
================================================================================
2.96 PREFERRED STOCKS
1.49 BRAZIL
Petroleo Brasileiro SA Sponsored ADR
Representing 1 Pfd Shr OM 35,000 928,182
================================================================================
1.47 GERMANY
SAP AG Sponsored ADR Representing
1/4 Pfd Shr CO 18,000 918,000
================================================================================
TOTAL PREFERRED STOCKS (Cost $1,662,037) 1,846,182
================================================================================
2.76 SHORT-TERM INVESTMENTS - REPURCHASE AGREEMENTS
2.76 UNITED STATES
Repurchase Agreement with State
Street dated 10/31/2000 due
11/1/2000 at 6.450%, repurchased
at $1,726,309 (Collaterized by US
Treasury Inflationary Index Bonds,
due 4/15/2028 at 3.625%, value
$1,756,268) (Cost $1,726,000) RA $1,726,000 1,726,000
================================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $61,133,520)
(Cost for Income Tax Purposes $61,611,318) $62,426,359
================================================================================
(a) Security is non-income producing.
<PAGE>
(b) The following is a restricted security at October 31, 2000:
SCHEDULE OF RESTRICTED OR ILLIQUID
SECURITIES
VALUE AS
ACQUISITION ACQUISITION % OF
DESCRIPTION DATE COST NET ASSETS
--------------------------------------------------------------------------------
EUROPEAN FUND
M Accoes Portugal Closed-End Fund 2/4/1998 $ 1,917,627 0.19 %
SUMMARY OF INVESTMENTS BY INDUSTRY
% OF
INDUSTRY INVESTMENT
INDUSTRY CODE SECURITIES VALUE
--------------------------------------------------------------------------------
EUROPEAN FUND
Aerospace & Defense AE 1.28% $ 11,209,510
Automobiles AM 1.34 11,777,402
Banks - Money Center BM 4.04 35,415,839
Biotechnology - Health Care BH 1.76 15,456,419
Broadcasting BR 2.07 18,122,448
Cable CA 0.49 4,334,519
Communications - Equipment &
Manufacturing CM 8.57 75,128,596
Computer Software & Services CO 11.90 104,343,926
Computer Systems CY 1.65 14,465,104
Computers - Networking CN 0.42 3,684,687
Consumer Finance CF 0.57 5,000,000
Electronics - Component Distributors EO 2.95 25,832,206
Electronics - Instrumentation EI 4.85 42,506,090
Electronics - Semiconductors ES 3.91 34,261,108
Engineering & Construction EC 2.10 18,397,234
Entertainment ET 1.10 9,679,118
Financial - Diversified FN 2.33 20,426,070
Foods FD 0.20 1,746,109
Footwear FT 1.61 14,098,215
Health Care Drugs - Pharmaceuticals HD 2.30 20,134,466
Insurance - Life IL 1.70 14,871,142
Insurance - Multi-Line IU 6.36 55,774,452
Investment Bank/Broker Firm IV 1.34 11,722,308
Investment Companies IC 1.35 11,808,742
Leisure Time LT 0.33 2,928,085
Machine Tools MT 0.57 4,990,020
Machinery - Diversified MD 0.42 3,675,617
Manufacturing - Diversified MV 2.10 18,460,617
Manufacturing - Specialized MS 3.80 33,328,974
Medical Equipment & Devices ME 3.23 28,336,869
Oil - International Integrated OI 2.98 26,166,286
Photography & Imaging PI 0.13 1,106,098
Pollution Control PC 3.45 30,239,289
Repurchase Agreements RA 1.72 15,080,000
Restaurants RS 0.72 6,308,944
Retail - Food Chains RF 0.61 5,363,613
Services - Advertising & Marketing SA 2.16 18,985,697
Services - Commercial & Consumer SC 1.02 8,978,085
Specialized Services SS 2.97 26,068,741
Telecommunications - Cellular & Wireless TC 3.55 31,171,373
Telecommunications - Long Distance TL 1.16 10,169,396
<PAGE>
% OF
INDUSTRY INVESTMENT
INDUSTRY CODE SECURITIES VALUE
--------------------------------------------------------------------------------
EUROPEAN FUND (CONTINUED)
Telephone TN 1.70% $ 14,892,726
Utilities - Water UW 1.19 10,406,833
================================================================================
100.00% $ 876,852,973
================================================================================
INTERNATIONAL BLUE CHIP
VALUE FUND
Air Freight AF 0.86% $ 536,115
Auto Parts & Equipment AP 0.83 520,257
Automobiles AM 1.47 918,399
Banks - Money Center BM 11.95 7,458,288
Banks - Regional BE 4.61 2,876,464
Beverages - Alcoholic BA 2.74 1,713,627
Chemicals - Diversified CD 3.46 2,161,349
Communications - Equipment &
Manufacturing CM 1.20 748,500
Computer Software & Services CO 1.47 918,000
Conglomerates CG 3.26 2,032,449
Consumer Finance CF 1.58 989,102
Electrical Equipment EE 1.25 780,500
Electronics - Component Distributors EO 4.51 2,816,732
Electronics - Instrumentation EI 1.75 1,092,408
Electronics - Semiconductors ES 1.43 892,073
Entertainment ET 0.50 313,718
Financial - Diversified FN 1.11 690,474
Foods FD 2.82 1,760,886
Gold & Precious Metals Mining GP 2.29 1,428,185
Health Care Drugs - Pharmaceuticals HD 6.17 3,852,273
Insurance - Multi-Line IU 5.14 3,211,133
Investment Bank/Broker Firm IV 0.05 31,165
Iron & Steel IS 0.58 360,000
Machinery - Diversified MD 1.24 776,628
Manufacturing - Specialized MS 0.92 572,321
Office Equipment & Supplies OE 2.25 1,401,550
Oil - Domestic Integrated OM 1.49 928,182
Oil - International Integrated OI 6.68 4,172,962
Photography & Imaging PI 2.26 1,409,470
Railroads RR 1.19 740,470
Real Estate RE 1.33 829,423
Repurchase Agreements RA 2.76 1,726,000
Retail - Department Stores RD 0.78 487,906
Retail - Food Chains RF 1.66 1,038,465
Services - Facilities & Environmental SF 1.15 717,917
Telecommunications - Cellular & Wireless TC 2.95 1,838,904
Telephone TN 10.72 6,692,215
Toys TY 1.59 991,849
================================================================================
100.00%$ 62,426,359
================================================================================
See Notes to Financial Statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
INVESCO INTERNATIONAL FUNDS, INC.
OCTOBER 31, 2000
INTERNATIONAL
EUROPEAN BLUE CHIP
FUND VALUE FUND
--------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 722,941,267 $ 61,133,520
================================================================================
At Value(a) $ 876,852,973 $ 62,426,359
Cash 2,653 8,049
Foreign Currency (Cost $2,755,210 and
$20,449, respectively) 2,748,500 19,682
Receivables:
Investment Securities Sold 6,857,739 958,937
Fund Shares Sold 14,694,141 756,338
Dividends and Interest 909,474 123,065
Prepaid Expenses and Other Assets 45,251 36,477
================================================================================
TOTAL ASSETS 902,110,731 64,328,907
================================================================================
LIABILITIES
Payables:
Investment Securities Purchased 3,378,581 1,441,598
Fund Shares Repurchased 781,592 61,056
Depreciation on Forward Foreign Currency
Contracts 78,414 5,884
Accrued Distribution Expenses
Investor Class 182,712 12,424
Class C 1,289 693
Accrued Expenses and Other Payables 163,589 17,831
================================================================================
TOTAL LIABILITIES 4,586,177 1,539,486
================================================================================
NET ASSETS AT VALUE $ 897,524,554 $ 62,789,421
================================================================================
NET ASSETS
Paid-in Capital(b) $ 693,857,430 $ 56,939,938
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income (Loss) 36,510 (279,934)
Accumulated Undistributed Net Realized Gain
on Investment Securities and Foreign
Currency Transactions 49,793,607 4,844,005
Net Appreciation of Investment Securities
and Foreign Currency Transactions 153,837,007 1,285,412
================================================================================
NET ASSETS AT VALUE, Applicable to Shares
Outstanding $ 897,524,554 $ 62,789,421
================================================================================
Net Assets at Value:
Investor Class $ 894,943,026 $ 61,707,573
================================================================================
Class C $ 2,581,528 $ 1,081,848
================================================================================
Shares Outstanding
Investor Class 41,567,777 5,531,793
Class C 120,737 97,097
NET ASSET VALUE, Offering and Redemption
Price per Share
Investor Class $ 21.53 $ 11.16
Class C (excludes applicable
contingent deferred sales charge) $ 21.38 $ 11.14
================================================================================
<PAGE>
(a)Investment securities at cost and value at October 31, 2000 include
repurchase agreements of $15,080,000 and $1,726,000 for European and
International Blue Chip Value Funds, respectively.
(b)The Fund has 1.5 billion authorized shares of common stock, par value $0.01
per share. Of such shares, 300 million have been allocated to European Fund
and 200 million to International Blue Chip Fund: 200 million to European -
Investor Class, 100 million to European - Class C, 100 million to
International Blue Chip Value - Investor Class and 100 million to
International Blue Chip Value - Class C.
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
INVESCO INTERNATIONAL FUNDS, INC.
YEAR ENDED OCTOBER 31, 2000
INTERNATIONAL
EUROPEAN BLUE CHIP
FUND VALUE FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 5,990,455 $ 1,010,978
Dividends from Affiliated Investment Companies 466,478 0
Interest 1,879,305 115,619
Foreign Taxes Withheld (835,285) (122,712)
================================================================================
TOTAL INCOME 7,500,953 1,003,885
================================================================================
EXPENSES
Investment Advisory Fees 6,049,699 467,780
Distribution Expenses
Investor Class 2,273,236 155,124
Class C 18,797 3,211
Transfer Agent Fees 2,101,743 400,990
Administrative Services Fees 420,028 38,067
Custodian Fees and Expenses 862,291 41,965
Directors' Fees and Expenses 39,463 11,231
Interest Expenses 1,028 0
Professional Fees and Expenses 46,191 22,253
Registration Fees and Expenses - Investor Class 76,267 71,923
Reports to Shareholders 220,862 55,779
Other Expenses 55,403 4,514
================================================================================
TOTAL EXPENSES 12,165,008 1,272,837
Fees and Expenses Paid Indirectly (799,812) (38,586)
================================================================================
NET EXPENSES 11,365,196 1,234,251
================================================================================
NET INVESTMENT LOSS (3,864,243) (230,366)
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 94,064,834 6,220,659
Foreign Currency Transactions (39,480,995) (664,167)
================================================================================
Total Net Realized Gain 54,583,839 5,556,492
================================================================================
Change in Net Appreciation (Depreciation) of:
Investment Securities 70,277,481 (1,838,844)
Foreign Currency Transactions (62,936,590) (3,205,063)
================================================================================
Total Net Appreciation (Depreciation) 7,340,891 (5,043,907)
================================================================================
NET GAIN ON INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS 61,924,730 512,585
================================================================================
Net Increase in Net Assets from Operations $ 58,060,487 $ 282,219
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
EUROPEAN FUND
YEAR ENDED OCTOBER 31
--------------------------------------------------------------------------------
2000 1999
OPERATIONS
Net Investment Loss $ (3,864,243) $ (3,056,849)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 54,583,839 15,703,473
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 7,340,891 68,996,802
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 58,060,487 81,643,426
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
In Excess of Net Investment Income - Investor Class 0 (189,864)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions -
Investor Class (13,208,928) (60,321,278)
================================================================================
TOTAL DISTRIBUTIONS (13,208,928) (60,511,142)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Investor Class 1,183,853,509 2,188,396,810
Class C 14,142,590 --
Reinvestment of Distributions - Investor Class 12,635,263 58,166,765
Net Assets Received from Acquisition of
European Small Company Fund (Note 3) -- 34,159,608
================================================================================
1,210,631,362 2,280,723,183
Amounts Paid for Repurchases of Shares
Investor Class (893,225,583) (2,427,744,259)
Class C (10,989,761) --
================================================================================
(904,215,344) (2,427,744,259)
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 306,416,018 (147,021,076)
================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS 351,267,577 (125,888,792)
NET ASSETS
Beginning of Period 546,256,977 672,145,769
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess of)
Net Investment Income (Loss) of $36,510 and
($32,101), respectively) $ 897,524,554 $ 546,256,977
================================================================================
------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold
Investor Class 46,197,629 123,053,362
Class C 574,115 --
Shares Issued from Reinvestment of Distributions
- Investor Class 622,733 3,451,340
Shares Issued in Connection with Acquisition of
European Small Company Fund (Note 3) -- 2,004,619
================================================================================
47,394,477 128,509,321
Shares Repurchased
Investor Class (35,575,854) (136,336,597)
Class C (453,378) --
================================================================================
(36,029,232) (136,336,597)
NET INCREASE (DECREASE) IN FUND SHARES 11,365,245 (7,827,276)
================================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(CONTINUED)
INTERNATIONAL BLUE CHIP VALUE FUND
YEAR ENDED OCTOBER 31
--------------------------------------------------------------------------------
2000 1999
OPERATIONS
Net Investment Income (Loss) $ (230,366) $ 84,832
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 5,556,492 805,411
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign Currency
Transactions (5,043,907) 2,355,065
================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 282,219 3,245,308
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income - Investor Class 0 (87,004)
In Excess of Net Investment Income - Investor Class (244,809) (333)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions - Investor
Class (1,260,037) 0
================================================================================
TOTAL DISTRIBUTIONS (1,504,846) (87,337)
================================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares
Investor Class 54,921,103 78,226,684
Class C 9,077,986 --
Reinvestment of Distributions - Investor Class 1,419,208 63,471
Net Assets Received from Acquisition
of International Growth Fund (Note 3) -- 25,686,580
================================================================================
65,418,297 103,976,735
Amounts Paid for Repurchases of Shares
Investor Class (45,125,608) (61,711,713)
Class C (7,990,883) --
================================================================================
(53,116,491) (61,711,713)
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 12,301,806 42,265,022
================================================================================
TOTAL INCREASE IN NET ASSETS 11,079,179 45,422,993
NET ASSETS
Beginning of Period 51,710,242 6,287,249
================================================================================
End of Period (Including Accumulated
Undistributed (Distributions in Excess
of) Net Investment Income (Loss)
of ($279,934) and $26,316, respectively) $ 62,789,421 $ 51,710,242
================================================================================
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(CONTINUED)
INTERNATIONAL BLUE CHIP VALUE FUND (CONTINUED)
YEAR ENDED OCTOBER 31
--------------------------------------------------------------------------------
2000 1999
FUND SHARE TRANSACTIONS
Shares Sold
Investor Class 4,658,313 7,452,507
Class C 783,904 --
Shares Issued from Reinvestment of Distributions
- Investor Class 123,332 5,677
Shares Issued in Connection with Acquisition
of International Growth Fund (Note 3) -- 2,370,352
================================================================================
5,565,549 9,828,536
Shares Repurchased
Investor Class (3,855,021) (5,850,884)
Class C (686,807) --
(4,541,828) (5,850,884)
NET INCREASE IN FUND SHARES 1,023,721 3,977,652
================================================================================
See Notes to Financial Statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
INVESCO INTERNATIONAL FUNDS, INC.
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO
International Funds, Inc. is incorporated in Maryland and presently consists of
four separate Funds: European Fund, International Blue Chip Value Fund, Latin
American Growth Fund and Pacific Basin Fund (individually the "Fund" and
collectively, the "Funds"). European and International Blue Chip Value Funds are
presented herein. Effective June 1, 2000, International Blue Chip Fund's name
changed to International Blue Chip Value Fund. On August 15, 2000, the board of
directors of the Funds approved the liquidation of Latin American Growth and
Pacific Basin Funds and effective November 29, 2000, Latin American Growth and
Pacific Basin Funds liquidated their assets and closed. The financial statements
of Latin American Growth and Pacific Basin Funds are not presented herein. The
investment objectives of the Funds are: to seek capital appreciation through
investments in designated geographical sectors for European Fund and to seek a
high total return through capital appreciation and current income by investing
in foreign companies for International Blue Chip Value Fund. INVESCO
International Funds, Inc. is registered under the Investment Company Act of 1940
(the "Act") as a diversified, open-end management investment company.
Effective February 15, 2000, each Fund began offering an additional class of
shares, referred to as Class C shares. Investor Class and Class C shares are
subject to an annual distribution fee of 0.25% and 1.00%, respectively, of the
Fund's annual average net assets attributable to each Class' shares. Income,
expenses (other than those attributable to a specific class) and gains and
losses are allocated daily to each class of shares based on the relative
proportion of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against operations of that class.
On May 20, 1999, shareholders of European, International Blue Chip Value and
International Growth Funds approved an Agreement and Plan of Reorganization and
Termination in which the following Funds merged: INVESCO Specialty Funds, Inc. -
INVESCO European Small Company Fund ("Target Fund") into European Fund
("Surviving Fund") and International Growth Fund ("Target Fund") into
International Blue Chip Value Fund ("Surviving Fund"). Shareholders of the
Target Funds became shareholders of the Surviving Funds and received shares of
the Surviving Funds equal in dollar value to the then current value of their
shares in the Target Funds, effective at the close of business on June 18, 1999.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
A. SECURITY VALUATION - Foreign securities are valued at the closing price on
the principal stock exchange on which they are traded. In the event that closing
prices are not available for foreign securities, prices will be obtained from
the principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to the
close of the New York Stock Exchange.
Equity securities and closed-end investment companies traded on national
securities exchanges or in the over-the-counter market are valued at the last
sales price at the close of the regular trading day on the exchange (generally
4:00 p.m. Eastern time) where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest closing bid
prices at the close of the regular trading day as obtained from one or more
dealers making a market for such securities or by a pricing service approved by
the Fund's board of directors.
<PAGE>
Investments in shares of investment companies are valued at the net asset value
of the respective mutual fund as calculated each day.
If market quotations or pricing service valuations are not readily available,
securities are valued at fair value as determined in good faith under procedures
established by the Fund's board of directors. Restricted securities are valued
in accordance with procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates market
value) if maturity is 60 days or less at the time of purchase, or market
value if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the date of valuation.
B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to ensure
its market value exceeds the current market value of the repurchase agreements
including accrued interest. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Certain dividends from foreign securities will be recorded as
soon as the Fund is informed of the dividend if such information is obtained
subsequent to the ex-dividend date. Interest income, which may be comprised of
stated coupon rate, market discount, original issue discount and amortized
premium, is recorded on the accrual basis. Income and expenses on foreign
securities are translated into U.S. dollars at rates of exchange prevailing when
accrued. Cost is determined on the specific identification basis. The cost of
foreign securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities are acquired.
Each Fund may invest in securities issued by other INVESCO Investment Companies
that invest in short-term debt securities and seek to maintain a net asset value
of one dollar per share. During the year ended October 31, 2000, the European
Fund invested in INVESCO Treasurer's Money Market Reserve Fund; the income from
this investment is disclosed in the Statement of Operations.
The Fund may have elements of risk due to concentrated investments in foreign
issuers located in a specific country. Such investments may subject the Fund to
additional risks resulting from future political or economic conditions and/ or
possible impositions of adverse foreign governmental laws or currency exchange
restrictions. Net realized and unrealized gain or loss from investment
securities includes fluctuations from currency exchange rates and fluctuations
in market value.
The Fund's use of short-term forward foreign currency contracts may subject it
to certain risks as a result of unanticipated movements in foreign exchange
rates. The Fund does not hold short-term forward foreign currency contracts for
trading purposes. The Fund may hold foreign currency in anticipation of settling
foreign security transactions and not for investment purposes.
D. FEDERAL AND STATE TAXES - The Fund has complied, and continues to comply,
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make sufficient
distributions of net investment income and net realized capital gains, if any,
to relieve it from all federal and state income taxes and federal excise taxes.
At October 31, 2000, European Fund had $3,305,087 in net capital loss carryovers
which expire in the year 2006. The capital loss carryovers from INVESCO
Specialty Funds, Inc. - European Small Company Fund (which was acquired by
European Fund on June 18, 1999), are subject to certain limitations under the
Internal Revenue Code.
<PAGE>
Net Capital loss carryovers utilized in 2000 by European Fund amounted to
$1,658,284. To the extent future capital gains are offset by capital loss
carryovers and deferred post-October 31 losses, such gains will not be
distributed to shareholders.
Dividends paid by the Fund from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders.
Investment income received from foreign sources may be subject to foreign
withholding taxes. Dividend and interest income is shown gross of foreign
withholding taxes in the accompanying financial statements.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and
distributions to shareholders are recorded by the Fund on the
ex-dividend/distribution date. The Fund distributes net realized capital gains,
if any, to its shareholders at least annually, if not offset by capital loss
carryovers. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
accounting principles generally accepted in the United States. These differences
are primarily due to differing treatments for amortized premiums, foreign
currency transactions, market discounts, nontaxable dividends, net operating
losses and expired capital loss carryforwards.
For the year ended October 31, 2000, the effects of such differences were as
follows:
<TABLE>
<CAPTION>
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED NET REALIZED
NET GAIN (LOSS) ON
INVESTMENT INVESTMENT PAID-IN
FUND INCOME SECURITIES CAPITAL
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European Fund $ 3,932,854 $ 230,547 $(4,163,401)
International Blue Chip Value Fund 168,925 (169,072) 147
</TABLE>
Net investment income (loss), net realized gains (losses) and net assets were
not affected.
F. FORWARD FOREIGN CURRENCY CONTRACTS - The Fund enters into short-term forward
foreign currency contracts in connection with planned purchases or sales of
securities as a hedge against fluctuations in foreign exchange rates pending the
settlement of transactions in foreign securities. A forward foreign currency
contract is an agreement between contracting parties to exchange an amount of
currency at some future time at an agreed upon rate. These contracts are
marked-to-market daily and the related appreciation or depreciation of the
contracts is presented in the Statement of Assets and Liabilities. Any realized
gain or loss incurred by the Fund upon the sale of securities is included in the
Statement of Operations.
G. EXPENSES - Each Fund or Class bears expenses incurred specifically on its
behalf and, in addition, each Fund or Class bears a portion of general expenses,
based on the relative net assets of each Fund or Class.
Under an agreement between each Fund and the Fund's Custodian, agreed upon
Custodian Fees and Expenses are reduced by credits granted by the Custodian from
any temporarily uninvested cash. Such credits are included in Fees and Expenses
Paid Indirectly in the Statement of Operations.
<PAGE>
NOTE 2 - INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Funds' investment adviser. As compensation for its
services to the Funds, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of each Fund's average net assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
--------------------------------------------------------------------------------------
$700 $2 $4 $6
$0 TO $350 TO MILLION BILLION BILLION BILLION OVER
$350 $700 TO $2 TO $4 TO $6 TO $8 $8
MILLION MILLION BILLION BILLION BILLION BILLION BILLION
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
European Fund 0.75% 0.65% 0.55% 0.45% 0.40% 0.375% 0.35%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
----------------------------------------------------------------------------------------------
$500 $1 $2 $4 $6
$0 TO MILLION BILLION BILLION BILLION BILLION OVER
$500 TO $1 TO $2 TO $4 TO $6 TO $8 $8
MILLION BILLION BILLION BILLION BILLION BILLION BILLION
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
International Blue
Chip Value Fund 0.75% 0.65% 0.55% 0.45% 0.40% 0.375% 0.35%
</TABLE>
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Asset
Management Limited ("IAML"), an affiliate of IFG, investment decisions of
European Fund are made by IAML. A separate Sub-Advisory Agreement between IFG
and INVESCO Global Asset Management (N.A.) ("IGAM"), an affiliate of IFG,
provides that investment decisions of International Blue Chip Value Fund are
made by IGAM. Fees for such sub-advisory services are paid by IFG.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
compensation of marketing and advertising expenditures to INVESCO Distributors,
Inc. ("IDI" or the "Distributor"), a wholly owned subsidiary of IFG, of 0.25% of
annual average net assets of Investor Class shares. A master distribution plan
and agreement pursuant to Rule 12b-1 of the Act provides for financing the
distribution and shareholder servicing of Class C shares of 1.00% per annum of
average daily net assets. Any unreimbursed expenses IDI incurs with respect to
Investor Class and Class C shares in any fiscal year can not be recovered in
subsequent years. For the year/period ended October 31, 2000, amounts paid to
the Distributor were as follows:
INVESTOR CLASS
FUND CLASS C
--------------------------------------------------------------------------------
European Fund $ 2,203,823 $ 17,509
International Blue Chip Value Fund 153,324 2,518
IFG receives a transfer agent fee from each Class at an annual rate of $22.50
per shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month. Prior to June 1, 2000, each Class paid an annual rate of $20.00 per
shareholder account, or, where applicable, per participant in an omnibus
account, per year.
<PAGE>
In accordance with an Administrative Services Agreement, each Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.045% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
A 2% redemption fee is retained by European Fund - Investor Class and
International Blue Chip Value Fund - Investor Class to offset transaction costs
and other expenses associated with short-term redemptions and exchanges. The fee
is imposed on redemptions or exchanges of shares held less than three months.
The redemption fee is accounted for as an addition to Paid-in Capital by each
Fund's Investor Class of shares. Total redemption fees received by European Fund
- Investor Class and International Blue Chip Value Fund - Investor Class for the
year ended October 31, 2000 were $1,006,020 and $3,758.
NOTE 3 - ACQUISITION OF INVESCO SPECIALTY FUNDS, INC. - EUROPEAN SMALL COMPANY
FUND ("TARGET FUND I") AND INVESCO INTERNATIONAL FUNDS, INC. - INTERNATIONAL
GROWTH FUND ("TARGET FUND II"). On June 18, 1999, European Fund acquired all the
net assets of Target Fund I pursuant to an Agreement and Plan of Reorganization
and Termination approved by Target Fund I shareholders on May 20, 1999. The
acquisition was accomplished by a tax-free exchange of 2,004,619 shares of
European Fund (valued at $34,159,608) for 3,168,711 shares of Target Fund I
outstanding on June 18, 1999. The Target Fund I's net assets at that date
($34,159,608), which included $3,476,753 of unrealized appreciation, were
combined with those of European Fund. The aggregate net assets of European Fund
and Target Fund I immediately before the acquisition were $543,756,820 and
$34,159,608, respectively. The net assets of European Fund after the acquisition
were $577,916,428.
On June 18, 1999, International Blue Chip Value Fund acquired all the net assets
of Target Fund II pursuant to an agreement and Plan of Reorganization and
Termination approved by Target Fund II shareholders on May 20, 1999. The
acquisition was accomplished by a tax-free exchange of 2,370,352 shares of
International Blue Chip Value Fund (valued at $25,686,580) for 2,548,476 shares
of Target Fund II outstanding on June 18, 1999. The Target Fund II's net assets
at that date ($25,686,580) which included $3,967,054 of unrealized appreciation,
were combined with those of International Blue Chip Value Fund. The aggregate
net assets of International Blue Chip Value Fund and Target Fund II immediately
before the acquisition were $24,684,034 and $25,686,580, respectively. The net
assets of International Blue Chip Value Fund after the acquisition were
$50,370,615.
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended
October 31, 2000, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
FUND PURCHASES SALES
--------------------------------------------------------------------------------
European Fund $981,001,585 $722,928,267
International Blue Chip Value Fund 45,303,683 35,067,085
There were no purchases or sales of U.S. Government securities.
NOTE 5 - APPRECIATION AND DEPRECIATION. At October 31, 2000, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation (depreciation) by Fund were as
follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
European Fund $228,850,171 $ 81,726,231 $ 147,123,940
International Blue Chip Value Fund 7,325,626 6,510,585 815,041
</TABLE>
<PAGE>
NOTE 6 - TRANSACTIONS WITH AFFILIATES. Certain of the Funds' officers and
directors are also officers and directors of IFG, IDI, IAML, or IGAM.
Each Fund has adopted an unfunded defined benefit deferred compensation plan
covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate as of January 1, 2000, equal to 50%
of the sum of the retainer fee plus the meeting attendance fees. Prior to
January 1, 2000, benefits under this were based on an annual rate equal to 50%
of the sum of the retainer fee at the time of retirement plus the meeting
attendance fees.
Pension expenses for the year ended October 31, 2000, included in Directors'
Fees and Expenses in the Statement of Operations, and unfunded accrued pension
costs and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
UNFUNDED
PENSION ACCRUED PENSION
FUND EXPENSES PENSION COSTS LIABILITY
--------------------------------------------------------------------------------
European Fund $ 13,168 $ 17,767 $ 64,146
International Blue Chip Value Fund 1,094 5,464 14,542
The independent directors have contributed to a deferred fee agreement plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of the INVESCO Funds. The
deferred amounts may be invested in the shares of any of the INVESCO Funds,
excluding the INVESCO Variable Investment Funds.
NOTE 7 - INTERFUND BORROWING AND LENDING. Each Fund is party to an interfund
lending agreement between each Fund and other INVESCO sponsored mutual funds,
which permit it to borrow or lend cash, at rates beneficial to both the
borrowing and lending funds. Loans totaling 10% or more of a borrowing Fund's
total assets are collateralized at 102% of the value of the loan; loans of less
than 10% are unsecured. Pursuant to each Fund's prospectus, each Fund may borrow
up to 33 1/3% of its total assets for temporary or emergency purposes. During
the year ended October 31, 2000, European Fund borrowed cash at a rate of 6.05%.
European Fund lent cash at a rate of 6.35%. At October 31, 2000 there were no
such borrowings and/or lendings for any Fund.
NOTE 8 - LINE OF CREDIT. Each Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the net assets at value of each respective
Fund. Each Fund agrees to pay annual fees and interest on the unpaid principal
balance on prevailing market rates as defined in the agreement. At October 31,
2000, there were no such borrowings.
NOTE 9 - CONTINGENT DEFERRED SALES CHARGE ("CDSC"). A 1.00% CDSC is charged by
each Fund's Class C shares on redemptions or exchanges of shares held thirteen
months or less (other than shares acquired through reinvestment of dividends or
other distributions). The CDSC is paid by the redeeming shareholder and
therefore it is not an expense of the Fund. For the period ended October 31,
2000, the Distributor received the following CDSC fees from Class C
shareholders:
FUND CDSC FEE
--------------------------------------------------------------------------------
European Fund $ 991
International Blue Chip Value Fund 83
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
INVESCO International Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO European Fund and INVESCO
International Blue Chip Value Fund (two of the funds of INVESCO International
Funds, Inc., hereafter referred to as the "Fund") at October 31, 2000, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2000 by correspondence with the
custodian and transfer agent, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Denver, Colorado
December 5, 2000
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EUROPEAN FUND - INVESTOR CLASS
------------------------------------------------------------------------------------------------------
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER 31
------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $ 18.01 $ 17.62 $ 17.34 $ 15.85 $ 14.09
======================================================================================================
INCOME FROM INVESTMENT OPERATIONS(a)
Net Investment Income (Loss) (0.11) (0.09) 0.04 0.07 0.05
Net Gains on Securities
(Both Realized and Unrealized) 4.07 2.18 3.58 2.63 3.00
======================================================================================================
TOTAL FROM INVESTMENT OPERATIONS 3.96 2.09 3.62 2.70 3.05
======================================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.00 0.06 0.07 0.08
In Excess of Net Investment Income(b) 0.00 0.01 0.00 0.00 0.00
Distributions from Capital Gains 0.44 1.69 3.28 1.14 1.21
======================================================================================================
TOTAL DISTRIBUTIONS 0.44 1.70 3.34 1.21 1.29
======================================================================================================
Net Asset Value - End of Period $ 21.53 $ 18.01 $ 17.62 $ 17.34 $ 15.85
======================================================================================================
TOTAL RETURN 22.08%(c) 12.64%(c) 24.92% 18.07% 23.47%
RATIOS
Net Assets - End of Period ($000 Omitted) $ 894,943 $ 546,257 $ 672,146 $ 324,819 $ 300,588
Ratio of Expenses to Average Net Assets(d) 1.33% 1.56% 1.34% 1.25% 1.36%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.42%) (0.48%) 0.24% 0.33% 0.37%
Portfolio Turnover Rate 84% 90% 102% 90% 91%
</TABLE>
(a) The per share information was computed using average shares for the years
ended October 31, 2000 and 1999.
(b) Distributions in Excess of Net Investment Income for the years ended October
31, 1998, aggregated less than $0.01 on a per share basis.
(c) The applicable redemption fees are not included in the Total Return
calculation.
(d) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements (which may include custodian and transfer agent fees).
<PAGE>
FINANCIAL HIGHLIGHTS
EUROPEAN FUND - CLASS C
--------------------------------------------------------------------------------
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD
ENDED
OCTOBER 31
--------------------------------------------------------------------------------
2000(a)
PER SHARE DATA
Net Asset Value - Beginning of Period $ 28.72
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.04)
Net Losses on Securities (Both Realized and Unrealized) (7.30)
================================================================================
TOTAL FROM INVESTMENT OPERATIONS (7.34)
================================================================================
Net Asset Value-- End of Period $ 21.38
================================================================================
TOTAL RETURN(b) (25.56%)(c)
RATIOS
Net Assets - End of Period ($000 Omitted) $ 2,582
Ratio of Expenses to Average Net Assets(d) 2.08%(e)
Ratio of Net Investment Loss to Average Net Assets (0.88%)(e)
Portfolio Turnover Rate 84%(f)
(a) From February 15, 2000, since inception of Class C, to October 31, 2000.
(b) The applicable CDSC fees are not included in the Total Return calculation.
(c) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(d) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements (which may include custodian fees).
(e) Annualized
(f) Portfolio Turnover is calculated at the Fund level, and therefore,
represents the year ended October 31, 2000.
<PAGE>
INTERNATIONAL BLUE CHIP VALUE FUND - INVESTOR CLASS
--------------------------------------------------------------------------------
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD
ENDED
YEAR ENDED OCTOBER 31 OCTOBER 31
--------------------------------------------------------------------------------
2000 1999 1998(a)
PER SHARE DATA
Net Asset Value - Beginning of Period $ 11.23 $ 10.02 $ 10.00
================================================================================
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.01) 0.02 0.00
Net Gains on Securities (Both Realized
and Unrealized) 0.27 1.21 0.02
================================================================================
TOTAL FROM INVESTMENT OPERATIONS 0.26 1.23 0.02
================================================================================
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.02 0.00
In Excess of Net Investment Income 0.05 0.00 0.00
Distributions from Capital Gains 0.28 0.00 0.00
================================================================================
TOTAL DISTRIBUTIONS 0.33 0.02 0.00
================================================================================
Net Asset Value - End of Period $ 11.16 $ 11.23 $ 10.02
================================================================================
TOTAL RETURN 2.66%(b) 11.77%(b) 0.20%(c)
RATIOS
Net Assets - End of Period ($000
Omitted) $ 61,708 $51,710 $ 6,287
Ratio of Expenses to Average Net
Assets(d)(e) 2.04% 2.09% 0.90%(f)
Ratio of Net Investment Income (Loss)
to Average Net Assets(d) (0.37%) 0.30% 6.16%(f)
Portfolio Turnover Rate 59% 112% 0%(c)
(a) From October 28, 1998, commencement of investment operations, to October 31,
1998.
(b) The applicable redemption fees are not included in the Total Return
calculation.
(c) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(d) Various expenses of the Class were voluntarily absorbed by IFG and IGAM for
the year ended October 31, 1999. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 2.56% and
ratio of net investment loss to average net assets would have been (0.17%).
(e) Ratio is based on Total Expenses of the Class, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements (which
may include custodian fees).
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS
INTERNATIONAL BLUE CHIP VALUE FUND - CLASS C
--------------------------------------------------------------------------------
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
PERIOD
ENDED
OCTOBER 31
--------------------------------------------------------------------------------
2000(a)
PER SHARE DATA
Net Asset Value - Beginning of Period $ 12.06
================================================================================
INCOME FROM INVESTMENT OPERATIONS(b)
Net Investment Loss (0.04)
Net Losses on Securities (Both Realized and Unrealized) (0.88)
================================================================================
TOTAL FROM INVESTMENT OPERATIONS (0.92)
================================================================================
Net Asset Value - End of Period $ 11.14
================================================================================
TOTAL RETURN(c) (7.63%)(d)
RATIOS
Net Assets - End of Period ($000 Omitted) $ 1,082
Ratio of Expenses to Average Net Assets(e) 2.47%(f)
Ratio of Net Investment Loss to Average Net Assets (0.56%)(f)
Portfolio Turnover Rate 59%(g)
(a) From February 15, 2000, since inception of Class C, to October 31, 2000.
(b) The per share information was computed using average shares.
(c) The applicable CDSC fees are not included in the Total Return calculation.
(d) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(e) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements (which may include custodian fees).
(f) Annualized
(g) Portfolio Turnover is calculated at the Fund level, and therefore,
represents the year ended October 31, 2000.
<PAGE>
WE'RE EASY TO STAY IN TOUCH WITH:
Investor Services: 1-800-525-8085
Personal Account Line: 1-800-424-8085
On the World Wide Web: invescofunds.com
INVESCO Distributors, Inc., (SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by a current prospectus.
AINT 9058 12/00
